I had a request last week to setup a hosting environment with a sub-domain of a sub-domain. I hadn't ever done it before so wasn't sure how or what I would run into. Turns out it was an easy setup.
I logged into WHM/cPanel and went into the normal sub-domain area.
For this example I'm just setting up sub2.sub1.prodjex.com. First you have to setup the first level of the domain, so the first sub-domain "sub1".
After that's created you can now setup your second sub-domain level of sub2. Make sure to select your first level sub-domain from the "Domain" dropdown.
Now your server is configured for the sub-domain of a sub-domain. Now let's update your DNS records to point to it. I use GoDaddy, but it's still just setting up an A or CNAME record at your registrar like so:
That's it, your sub-domain of a sub-domain is now correctly setup and working once the DNS propagates!